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Yahoo Sold to Verizon

Yahoo has struggled for over 10 years as it suffered huge loses in revenue from decreases in search traffic and advertising revenue to growing companies like Google and Facebook. The company reached its height in 2000 under chief executive Tim Koogle who began to work for Yahoo shortly after it was formed in 1995. The dotcom bubble popped in 2001 causing stock prices to plummet from their height of over $100 a share down to about $10.

Terry Semel became the chief executive of the company in 2001 but resigned due to pressure from investors asking him to step down as the company struggled to compete against Google. Jerry Yang, the co-founder of the company then stepped in as interim CEO until 2009 when he was asked to step down. Carol Bartz then became CEO of Yahoo until 2011 when she was fired for not reviving the company; the stock prices fell once again from about $30 a share under Jerry Yang to about $18 a share. Scott Thompson was then named the company’s CEO of Yahoo for a few months until an investigation revealed that he had lied about a college degree that he had not actually received.

Marissa Mayer then went on to be the CEO of Yahoo for five years and managed to provide some growth for the company in mobile and video advertising and raise stock prices up to about $50 a share.

However, with Google making up 63 percent of the U.S. web search engine shares and Microsoft at 23 percent, the 12 percent that Yahoo held was not enough. The same applies to U.S. digital ad revenue shares of which Yahoo made up 3 percent while its main competitors Google and Facebook made up 39 percent and 15 percent respectively. Yahoo had endured many rounds of layoffs over the years.

During the five years that Ms. Mayer was the CEO of Yahoo, the work force of the company dropped by 46 percent until there was a reported 8,600 full times workers as of March. These layoffs are understandable as Yahoo’s annual net income for 2015 was a deficit of $4.4 billion.

After pressure from investors, Yahoo decided that it was the right course of action to sell its company to Verizon and keep the cash from the sale of the company as well as its 15 percent stock holdings worth about $48 million  in the thriving Alibaba online vendor and advertising company as well as their shares in Yahoo Japan. With all of this remaining, the company will rename itself Altaba.

Investors view this as good news for Yahoo and after the news of the Verizon acquisition, stock prices rose 10 percent, or about $5.61, so that the stock value is now about $55.71. Verizon plans to lay off another 2,100 workers after it completes its acquisition but this increase in stock price will provide an increase in accumulated stock compensation since all workers are provided with stock of the company.

With the increase in stock price, Ms. Mayer will leave Yahoo $264 million for her five years of work which is an increase from the prior $239 million she was expected to walk away with. Other Yahoo executives will be receiving two years pay and stock compensation equating to several millions of dollars.

Featured Image Via Pixabay

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